Mortgage technology

Chase Manhattan Mortgage Corp.'s correspondent division has announced a new website combining real-time loan status with Internet technology.The site offers lenders access to loan information and status data for every loan they fund through Chase. "Now when a Chase underwriter or funder enters a status in the system, the reports on the website are updated within seconds," said Deane Hall, executive vice president of Chase's correspondent division. Lenders can gain instant access to information -- such as which loans are about to expire -- view rate and price bulletins, and search an online version of the correspondent lending products and programs guide. "In the past a correspondent had to pick up the phone and call an account rep. Now he can access the system on the Internet and learn the status of the loan," said David Matthews, senior vice president and chief information officer for Chase Manhattan Mortgage. The website address is http://www.mortgage.chase.com/correspondent.

From a technology standpoint, the questions of particular interest from the Fannie Mae survey (see item above) were the percentage of borrowers with Internet access and the willingness of borrowers to purchase a mortgage in cyberspace.The results were surprising. Many more Americans have computers today than had them in 1996, but there has been a decrease in the percentage of people that say they would apply for a mortgage online. In 1996, 36% of adults said they had Internet access, either at home or at work. That number has jumped to 52%. Yet while 20% of adults two years ago said they would "probably or definitely try" originating a mortgage online, only 15% say they would do so today, according to Fannie Mae. Interestingly, there is virtually no difference in the percentage of Baby Boomers and Generation Xers who would try to originate a mortgage online.

Charter Research Inc., Boston, has released a new version of Conquest, its bond pricing and analysis tool.The company said the new release is "an entirely new category" of commercial mortgage-backed security analytical tool. Michael A. Ervolini, president and chief executive officer of Charter Research, said the proliferation of CMBS deals has created a need for "a higher level of performance" from the software. He said the new release improves the ability to access and analyze transactions and offers "the ability to tie bond pricing to the credit of the properties underlying each loan comprising a CMBS loan pool, which we call credit-driven analysis." Mr. Ervolini can be reached via e-mail at ervolini@charterresearch.com.

An electronic link that will enable lenders to bid on loans posted by mortgage brokers will be established by Freddie Mac and IMX, Freddie Mac has announced.Through Freddie Mac's GoldWorks network, lenders will be able to query, select, and bid on loans posted by brokers using IMX's MatchMaker software. "With more than 1,000 lenders on GoldWorks, brokers using MatchMaker will be able to receive real-time bids from the most expansive pool of lenders possible," said Bob Ryan, Freddie Mac's vice president of marketing and pricing. When a lender places a bid, the broker will be notified by MatchMaker as well as via e-mail or alphanumeric pager. Once a bid is accepted, the identities of the lender and the broker are revealed. The lock-in will be binding for both, and loan file delivery will proceed as it would in a traditional transaction, Freddie Mac said. IMX president Mark Korell said loans will be placed "not in hours or days, but in a matter of minutes." Freddie Mac's website address is http://www.freddiemac.com.

The race for Internet mortgage dominance can now begin in earnest as Microsoft enters the fray with its long-awaited HomeAdvisor site (http://www.homeadvisor.com).The site provides borrowers with access to mortgages from three prominent lenders -- American Finance & Investment, Homeside, and Principal Residential Mortgage. Familiar to borrowers on and off the Internet, these lenders also offer their mortgage products through E-Loan and QuickenMortgage, two online competitors of HomeAdvisor. In addition, HomeAdvisor provides advice on understanding the homebuying process, negotiating for a house, collecting demographic information, and comparing homes online. But the site, unfortunately, cannot answer the questions that have been on the minds of mortgage technologists for months: Does Microsoft, as some observers fear, intend to dominate the online mortgage marketplace, squeezing out long-time lenders? It's a contention the company denies. Or does Microsoft plan to coexist with lenders, many of whom are long-time Microsoft clients? Over the next several months, the answers to these questions will become more apparent.

Spending for Internet-based mortgage loan services will exceed $525 million in the year 2000, according to a new study by Killen & Associates, Palo Alto, Calif. The dominant share of the spending will occur in the U.S., where mortgage services are far ahead of those in other nations, the study says.Titled "Loans Over the Internet: New Opportunities and Threats," the study also found that only about 20% of banks worldwide will offer Web-based mortgage services by 2000, but that the number will triple by 2005. Killen and Associates' website address is http://www.killen.com.

For the first time, the federal government has begun using e-checks to make Internet payments.On behalf of the Defense Department, the U.S.Treasury's Financial Management Service issued the first ever e-check to GTE Internetworking to make a payment on a government contract. Approximately 50 government contractors are expected to participate in the market trial of e-check technology by year end, with a full-scale rollout by 2000. The e-check initiative was sponsored by Financial Services Technology Consortium, a not-for-profit research and development organization composed of banks, technology providers, academic institutions, and government agencies. Although mortgage lenders have so far not participated in the program, they may in the future.

London Bridge Software Holdings plc announced Wednesday that it has agreed in principle to purchase CheckFree's mortgage products division.The terms of the deal will not be released until negotiations are finalized and a definitive agreement is executed. The deal is expected to close in late July. The mortgage products division operations and most of its 103 associates will remain in Atlanta and in Orlando, Fla. CheckFree announced in April that it planned to sell off seven divisions so it could concentrate on financial electronic commerce processing. To date, the company has sold its check processing, electronic cash management, and wire transfer business. CheckFree expects to complete the announced divestitures by the end of July. London Bridge acquired CheckFree's Recovery Management Services business in August.

Lenders Interactive Network, Mercer Island, Wash., has announced a marketing agreement with Seattle-based Byte Enterprises.The partnership will enhance the functionality of Byte's software and LION's online mortgage program as well as market each other's products and services, the companies said. Because of the agreement, Byte software will be automatically updated with LION information. LION's loan search, for example, will include a "Byte" button that allows the LION user to select a loan program and transmit an encoded message containing program information into Byte's Qualifier Series. Amy O'Brien, director of quality assurance and auditing at Qpoint Home Mortgage Network, a joint client of LION and Byte, said the automated links will enable her company to update loan information more quickly and accurately. "As a result, we can provide quicker answers to our mortgage customers," she said. LION's website address is http://www.lioninc.com. Byte's is http://www.byteenterprises.com.

Contour Software has released software that will facilitate a variety of mortgage-related electronic transactions over the Internet, the company announced at the National Association of Mortgage Brokers '98 Annual Convention and Showcase in Chicago.The software, WebIT, will use the Internet to replace existing EDI solutions between mortgage companies and their vendors. Lenders can automatically transfer data onto a webpage from any vendor, instead of having to build EDI solutions that require data files, conversion routines, and communications software, Contour said. WebIT was designed to speed communications between trading partners and to provide a single Internet connection among trading partners, according to Scott Cooley, president of Contour Software. Kirk Knott, director of information systems for Old Republic Title Co., said it required "almost no effort on our part" for Contour to integrate the company's webpage with the WebIT software. Contour announced that the following 10 companies are its initial electronic commerce partners: The Money Store, Old Republic Title, Lereta Flood, PLU Flood, America's Flood, Fidelity National flood, Intell Flood, Factual Data Corp., Credit Profile Services, and PSAR.

Fannie Mae, Freddie Mac, and the Mortgage Bankers Association of America will guarantee up to $8 million in loans to the Mortgage Electronic Registration Systems Inc., a McLean, Va., enterprise that is cooperatively owned by member firms.MERS is trying to jump-start an electronic registry for tracking ownership of mortgage loans and servicing rights. The recapitalization plan, which also includes support from participating lenders, was necessary because MERS backers underestimated how long it would take the industry to implement the electronic registry.

Tuttle & Co., a risk management and software provider based in Mill Valley, Calif., has released a new version of its Loan Officer Plus, a point-of-sale origination softwareprogram for both prime and subprime single-family residential loans.Loan Officer Plus can connect to credit reporting agencies and automated underwriting systems, and is also available on compact disc. The software is a management system and a pre-underwriting system for a loan officer, and can be used to collect and send information to the loan processor electronically, eliminating double entry. The new features in version 4.2 include the guidelines for Fannie Mae and Freddie Mac 97% LTV loans. The program can also help banks fulfill Community Reinvestment Act requirements by allowing them to target lenders by borrower income or geographic location.

Fair, Isaac and Co. has created a special portfolio model to help lenders overcome the shortage of data available to create scoring models.The model is based on the experience of approximately 196,000 borrowers. The California-based company's special portfolio model "rank orders the likelihood of someone becoming a 'bad' payer based on experiences across the board from A loans to C+ loans, and includes high-LTV loans of over 100%," Sally Relova, Fair Isaac's project manager for analytic R&D, told MortgageWire. She said the special portfolio models are unique because they include a database of good and bad loans. Many lenders find it "very difficult to get enough bad loans," Ms. Relova said. "Most portfolios are pretty clean, so lenders cannot develop custom scorecards because their portfolios are too limited." Without a full range of loans, "you cannot create a good model," she said.

Fannie Mae and Finet Holdings Corp. have received the 1998 Computerworld Smithsonian Award in the finance, insurance, and real estate category for their efforts to develop mortgage-related Internet technology.Fannie Mae was recognized for creating its HomePath.com website and developing Desktop Underwriter, its automated underwriting system. Finet was cited for combining its iQualify.com website with Fannie Mae's DU and its Web technology to offer online access to mortgage information, multiple lenders, and loan approvals. Fannie Mae said Monument Mortgage, a Finet subsidiary, was the first of its approved lenders to integrate DU into its Internet channel to offer underwriting recommendations at the point of sale from its website, iQualify. The website is hyperlinked to Fannie Mae's HomePath.com, which is designed to enable consumers to determine whether they are ready for homeownership. Fannie Mae and Finet were nominated for the award by Sun Microsystems Inc. and Sybase Inc. The Computerworld Smithsonian Awards, founded in 1989, recognize leadership in the innovative use of information technology in a variety of fields.

The Mortgage Bankers Association of America and a group of 15 major mortgage industry firms have announced that they are creating an office to test the mortgage industry's readiness for the year 2000.The testing program will allow mortgage industry companies meeting certain eligibility requirements to test their systems for year-2000 readiness with their trading partners. The companies estimate that they will spend upwards of $500 million in the testing effort, said Joe McCartin, chairman of the MBA committee on the year-2000 issue and an official with G.E. Capital Mortgage Services. Startup costs for the program will be provided by the MBA, Fannie Mae, and Freddie Mac. The announcement was made at the MBA's Servicing Conference in San Francisco.

Wells Fargo online is now offering home equity credit decision-making in real time.Unlike some online or telephone services that take days to process a response, this new service will enable consumers to receive an answer within seconds of submitting a loan application, according to the San Francisco-based Wells Fargo. "People usually have big plans for their loan, such as education, home improvement, or debt consolidation," said Colin Walsh, vice president of U.S. Equity at Wells Fargo. "We want to help our customers reach their goals as quickly as possible."

A just-released collection module for Interlinq's MortgageWare Loan Servicing version 2.0 has been shown at the 12th annual MortgageWare Users' Group conference in Bellevue, Wash. The module enables lenders to track delinquent borrowers and bring servicing in-house at a per-loan annual cost of less than $4.The Kirkland, Wash.-based Interlinq has also developed an interface to Fannie Mae's MortgageLinks that will allow users to connect to their choice of credit bureaus, order credit reports, and autopopulate the liabilities into an application. Another Interlinq product, MortgageWare InvestorLinq, works with MortgageWare MarketLinq to help manage secondary marketing risk.